Businesses seek to earn a profit by providing goods and services to others.

A.

True

B.

False

2.

People living in the nation of Richland earn more money than people living in the nation of Povertiana. This will result in the citizens of Richland enjoying a higher standard of living than the citizens of Wagonia.

A.

True

B.

False

3.

Social responsibility is one of the five factors of production that contribute to the creation of wealth.

A.

True

B.

False

4.

Under the leadership of Jeff Bezos - the founder of Amazon.com, the company has had to make constant adjustments to the market it serves.

A.

True

B.

False

5.

E-commerce refers to the buying and selling of goods over the internet

A.

True

B.

False

6.

Microeconomics is the field of study that looks at the operation of the nation's economy as a whole.

A.

True

B.

False

7.

The evolution of the U.S. economy has involved a transition from an agricultural economy to a manufactuing economy to a service-based economy

A.

True

B.

False

8.

One reason given for the decline in the number of U.S. workers employed in manufacturing is that manufacturing firms in the U.S. have become more efficient.

A.

True

B.

False

9.

The study of how society decides how to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as sociology

A.

True

B.

False

10.

Capitalism and Communism are considered ideological opposites

A.

True

B.

False

11.

Communism is the foundation of the U.S. economic system.

A.

True

B.

False

12.

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a given time

A.

True

B.

False

13.

In perfect competition, each firm produces a product that is clearly differentiated from products of other firms in the same market.

A.

True

B.

False

14.

Monica notices that just five companies produce over three-quarters of all soft drinks. She would be correct in describing the soft-drink industry as an oligopoly.

A.

True

B.

False

15.

The major benefit of socialism is that it creates strong incentives to work hard and take the risks associated with starting and operating a business.

A.

True

B.

False

16.

Communism is an economic and political system in which the government makes almost all economic decisions and owns almost all of the major factors of production.

A.

True

B.

False

17.

Like many nations, the United States has what is called a mixed economy or a mixed market economy.

A.

True

B.

False

18.

Any output produced by U.S. firms is included in the value of the GDP, even if the output was produced in a foreign country.

A.

True

B.

False

19.

To be classified as unemployed and counted in the nation's unemployment calculation, a person must be at least 21 years old and must have tried to find a job in the last 24 hours.

A.

True

B.

False

20.

GDP figures do not include the value of illegal activities.

A.

True

B.

False

21.

Frictional unemployment occurs because the economy is experiencing a recession.

A.

True

B.

False

22.

Disinflation refers to a situation in which the overall level of prices in an economy is steadily falling.

A.

True

B.

False

23.

The producer price index measures what is happening to prices at the wholesale level.

A.

True

B.

False

24.

The "textbook definition" of recession is an economy wherein GDP declines for two or more consecutive quarters.

A.

True

B.

False

25.

Fiscal policy refers to the government's efforts to keep the economy stable by increasing or decreasing short-term interest rates.

A.

True

B.

False

26.

Recessions are an inevitable part of business cycles.

A.

True

B.

False

27.

Exporting involves the selling of products to another country.

A.

True

B.

False

28.

Monetary policy is the management of the money supply and interest rates and is under the control of the president and the congress

A.

True

B.

False

29.

One of the justifications for government intervention in the economy is that the accumulation of wealth in society is not always even.

A.

True

B.

False

30.

The US postal service is a good example of monopolistic competition

A.

True

B.

False

31.

NAFTA represents a trade agreement among the united states, mexico, and cuba.

A.

True

B.

False

32.

Critics of the Central American Free Trade Agreement (CAFTA) argue that NAFTA will cost american jobs, especially in the sugar and textile industries.

A.

True

B.

False

33.

All of the countries in Europe have now adopted the euro as their common currency.

A.

True

B.

False

34.

The best way for a compnay to go international is to form a foreign subsidiary since it minimizes risk for the company.

A.

True

B.

False

35.

The Teamster's union was one of the major supporters of the NAFTA provision allowing Mexican trucks access to US highways for the purposes of delivering goods from Mexico to the United States.

A.

True

B.

False

36.

Ethical behavior requires more then merely following the law.

A.

True

B.

False

37.

In class we defined ethics as the rules and principles which guide right versus wrong conduct.

A.

True

B.

False

38.

The first step in the "Four Questions" test of ethical behavior is asking "Will the action deny due process to someone?"

A.

True

B.

False

39.

Designing an employee incentive program based on an unrealistic increase in sales could lead to unethical behavior.

A.

True

B.

False

40.

The case of R.J. Reynolds and its marketing of Downtown cigarettes was used in class as an example of a situation where an unethical decision could nonetheless be legal.

A.

True

B.

False

41.

An ethical lapse can be used to describe a situation involving a conflict between two arguably valid positions.

A.

True

B.

False

42.

The Sarbanes-Oxley Act (SOX), passed in 2002, now protects executives like JEff Skilling, former CEO of Enron, from being prosecuted for deceiving stockholders and others regarding the financial condition of their company.

A.

True

B.

False

43.

Stocks represent shares of ownership in a company.

A.

True

B.

False

44.

Bondholders are also owners of a company.

A.

True

B.

False

45.

The P/E ratio of a stock is a measure of "performance" to "equity"

A.

True

B.

False

46.

When acquiring funds through the sale of a bond, the business incurs a legal obligation to pay regular interest payments.

A.

True

B.

False

47.

The first public offering of a company's stock is called an initial public offering or IPO.

A.

True

B.

False

48.

If a stock's current price is $50 per share, it's earnings are $4 per share, and it is paying a dividend of $1.50 per share, the stock's price-to-earnings ratio is 12.5

A.

True

B.

False

49.

Unlike trading on the NYSE, trading on the NASDAQ takes place on an electronic network.

A.

True

B.

False

50.

The dividend yield on a stock equals its dividend divided by earnings.

A.

True

B.

False

51.

Any activity which seeks to earn a profit by providing a good or service is known as a(n)

A.

Industry

B.

Corporation

C.

Business

D.

Service

52.

Starting a business always involves a

A.

profit

B.

loss

C.

revenue

D.

risk

53.

The amount of goods and services people can buy with the money they have is called their

A.

nominal income

B.

consumer price index

C.

profit margin

D.

standard of living

54.

Which of the following is a factor of production?

A.

bonds

B.

money

C.

knowledge

D.

service

55.

Which of the following is a basic right under capitalism?

A.

freedom of collusion

B.

freedom from taxation

C.

the right to vote

D.

the right to compete

56.

A typical supply curve shows that the increase in the price of a good will cause the quantity supplied to

A.

remain constant

B.

fluctuate randomly around its equilibrium point

C.

decrease

D.

increase

57.

The willingness and ability of sellers to provide goods and services for sale in a market is referred to as

A.

supply

B.

the equilibrium price

C.

microeconomics

D.

demand

58.

The study of macroeconomics is

A.

not related to microeconomics

B.

primarily concerned with individual businesses and decisions

C.

concerned with studying the total economy

D.

not related to government decisions concerning spending and taxes

59.

If the number of buyers increases, the demand curve will shift to the _______ and the price will _______.

A.

right; fall

B.

left; fall

C.

right; rise

D.

left; rise

60.

Which of the following statements about demand curves is true?

A.

when the price rises, demand increases.

B.

when the price falls, demand decreases.

C.

when the price falls, demand increases.

D.

when the price falls, supply increases.

61.

An oligopoly is a market that is characterized by

A.

one firm that totally dominates the supply of the product

B.

a large number of small firms all producing fairly similar products

C.

a few large firms that dominate the market supply

D.

several small firms that compete primarily by differentiating their products.

62.

Entrepreneurs have the most economic freedom in which type of economy?

A.

communism

B.

socialism

C.

capitalism

D.

mixed economy

63.

The four different types of market structure in a private enterprise system are

A.

communism, socialism, capitalism, and mixed systems

B.

pure competition, monopolistic competition, oligopoly, and monopoly

C.

socialism, oligopoly, monopoly, and pure competition

D.

mixed, socialism, communism, and pure competition

64.

The four types of unemployment are

A.

recessional, inflation, frictional, and cyclical

B.

inflation, frictional, cyclical, and structural

C.

recessional, frictional, cyclical, and structural

D.

frictional, cyclical, structural, and seasonal.

65.

The European Union created a single monetary unit to replace the national currencies of some, but not all, of ties member nations. This common currency is known as the

A.

e-dollar

B.

pound

C.

mercosur

D.

euro

66.

An example of a regional trading alliance is which one of the following?

A.

the United States

B.

Mars and Venus

C.

NAFTA

D.

AFL-CIO

67.

A major concern voiced by US critics of the NAFTA is that it would result in:

A.

higher prices for consumer goods

B.

loss of jobs in the US economy

C.

national security problems

D.

increased illegal immigration from Mexico

68.

The first stem of the four questions test when facing an ethical dilemma is to ask

A.

is it legal?

B.

is it balanced?

C.

how will it make me feel about myself?

D.

is it ethical?

69.

The Securities and Exchange Act of 1934 created the

A.

Securities and Exchange Commission

B.

Federal Reserve System

C.

New York Stock Exchange

D.

NASDAQ

70.

In terms of dollar value of stocks traded, which of the following stock markets is the largest?

A.

NYSE

B.

NASDAQ

C.

London

D.

American

71.

Which of the following stock market indexes is considered to be the broadest measure of overall stock market activity?

A.

Dow Jones Industrial Average

B.

S & P 500

C.

NASDAQ Composite

D.

FT-100

72.

Which agency has most of the federal regulatory responsibility over the securities market?

A.

Securities and Exchange Commission

B.

Federal Reserve Board

C.

Department of the Treasury

D.

IRS

73.

Your instructor recommends that you perform financial analysis for your compnay by

A.

utilizing the CSM library website

B.

going directly to the library of congress

C.

plagiarizing a former student's report

D.

buying all the related books at barnes and noble

74.

Compared to common stockholders, preferred stockholders have a ______ claim to asset and _______ claim to dividends.

A.

senior; senior

B.

senior; junior

C.

junior; senior

D.

junior; junior

75.

With respect to the primary securities market, the term IPO stands for